THE WHOLE PICTURE

Anyone can lay claim to the title of financial planner. But that doesn't mean just anyone has the combination of brains, training and wisdom to do the job.

Some so-called planners simply want to hawk their financial wares and reap commissions on insurance, annuities, or stocks and bonds. Even though many of these advisers have the necessary state or federal licenses to sell these investments, no government agency regulates them as financial planners.

So, if you're not careful, when you simply want advice about retirement planning, you could instead wind up being talked into some insurance policy or limited partnership you don't need.

What is a consumer to do?

Hire a CFP, a CFA or a ChFC? Such impressive-looking designations, which come only after special tests or courses in financial planning, aren't always the best indicator of a financial planner's worth.

Usually, people will hire a planner simply based on a referral, without doing any research, says Errold F. Moody Jr., who holds a master's degree in financial planning and teaches financial planning at several universities, including the University of California, Irvine. But there's much more to do than that. Before you plunk down your financial future and money with a stranger, you need to do a lot of homework.

Ask yourself the following questions. Taken together, the answers you get will help you find a financial planner who is right for you.

- What do you want? Do you need help setting up a retirement fund? Want to buy a home but don't know how much you can afford? Figure out what it is you need help with, then look for the planner with the appropriate background.

Be realistic about your goals. If you want to make money on investments, you're probably better off with a broker, said Moody.

Think carefully about what type of relationship you want with the planner and how often you'll want to meet, said Larry Beltramo, a certified financial planner with Regency Securities in Irvine.

- What do others say? Take referrals and recommendations with a grain of salt. Referrals are a big part of the financial planning industry. Salespeople are told to give referrals, Moody said. "But where's the competency?" he asked. "(Referrals) are a perception people use to show competency, but it's not always reality."

Consumers shopping for a financial planner are often told to check with friends or business associates for recommendations. Call a financial planning group for a referral to a planner in your area. But consumers need to understand that a referral is just that: a suggestion.

- What's their background? Lots of things to examine here. Start with their education. Moody encourages consumers to look for planners who have a graduate degree in financial planning. While there's nothing wrong with people who have been certified through special programs, Moody said a master's degree offers more in-depth study.

Certified financial planners, chartered financial consultants and others have taken special courses that give them a general background in financial planning. Some certifications allow planners to focus on certain areas, such as investments or insurance. That certification gives consumers a base line, said Patrick McDonald, a certified financial planner in Placentia, Calif. "It tells you they have some training, but it won't tell you how good they are."

Degrees or certifications don't mean much without experience, Moody and McDonald say. Moody suggests picking a planner with at least 10 years of experience. Ask about their areas of expertise and continuing education.

There isn't a single institution on the federal level that regulates financial planners. But there are several back doors into checking out your candidates. If your would-be advisers have financial planner certifications, call the organization to see if they are licensed to use the mark and if they're in good standing.

If your prospective planners handle investments, they will be registered with a state regulatory board (under $25 million in assets) or with the Securities and Exchange Commission (handles assets of more than $25 million.) You should call the appropriate agencies to see if any disciplinary action or complaints have been filed against them.

If they're handling your investments, ask to see their ADV form, which outlines their background and sources of income. Anyone who gives investment advice in return for compensation must file an ADV form with the SEC. Keep in mind that not all infractions listed are grounds for dismissal from your list. For example, if a client lost money because he invested in a technology stock and was angry, he could file a complaint, Beltramo said.

- How do they do business? You want to know upfront how the planners on your list make their money and what products they sell. If they won't tell you, "disappear fast," said McDonald. Many planners, in addition to offering their planning services, sell financial products, such as insurance. Some make a commission off their sales. Consumers should be aware of potential conflicts of interest, but shouldn't automatically dismiss anyone who makes money from commission.

THE ABCS OF FINANCIAL PLANNER DESIGNATIONS

- Certified Financial Planner--CFPs Must pass a two-day exam and have three to five years of financial-planning work experience. Awarded by the Certified Financial Planners Board of Standards, 303-830-7500, www.CFP-Board.org

- Certified Public Accountant--CPAs must have a bachelor's degree and pass a national exam. Should also be a member of the American Institute of Certified Public Accountants, 888-777-7077, www.aicpa.org

- Chartered Financial Analyst--CFAs must pass three tests on investing and must have a bachelor's degree and three years' experience in financial sector. Awarded by the Association for Investment Management and Research, 800-247-8132, www.aimr.org

- Chartered Financial Consultant--ChFCs must have three years of experience in financial services and must complete a 10-course curriculum that focuses on financial planning. Call the Society of Financial Service Professionals, 610-526-2500, www.financialpro.org

- Enrolled Agent--Must pass a two-day tax exam and background check, both administered by the IRS. Should be a member of the National Association of Enrolled Agents, 800-424-4339, www.naea.org

- Personal Financial Specialist--Awarded to CPAs who have at least three years of financial planning experience, pass a six-hour financial planning exam and complete 72 hours of continuing education every three years. Must be a member of the American Institute of Certified Public Accountants, 888-777-7077, www.aicpa.org

- Registered Representative--A stockbroker. Must pass exams administered by the National Association of Securities Dealers and any exams required by the state. 800-289-9999, www.nasdr.com

- Registered Investment Adviser--Anyone can become an RIA by registering with the Securities and Exchange Commission, filing a form and paying a fee. An RIA who only manages money in a no-load mutual fund for a percentage of assets is not required to register with the NASD or the state.